A jetty under construction will prevent the entrance of the channel from closing.

A man leaps over a trail in a recently filled wetlands area under land that is set for residential development.

BOLSA CHICA MESA: A coyote looks out from a cliffside that will soon be a housing development from Hearthside Homes.

TAKING FLIGHT: Hundreds of least terns congregate on an island in the Bolsa Chica wetlands last week. Workers are in the process of building jetties that will act as an ocean inlet for the wetlands. Building the jetties will require tons of huge rocks taken from a quarry on Catalina Island.

SLATED FOR HOMES: Ed Mountford, senior vice president of Hearthside Homes, stands on the company's Bolsa Chica area land set for residential development. Bulldozers are set to roll Monday.

HUNTINGTON BEACH – Bulldozers will break ground Monday on a neighborhood of ocean-view homes on the Bolsa Chica Mesa – a symbolic end to a 30-year feud over one of the last remaining coastal wetlands in California.

The construction culminates a landmark deal between developers and environmentalists in which homebuilder California Coastal Communities Inc. sold 103 acres of its wetlands holdings to the state in exchange for permission to build 356 homes.

The million-dollar houses will be the first to go up in the wetlands area, where American Indians worked, where farmers harvested lima beans and where until recently, residents hiked and walked their dogs.

But controversy surrounding Bolsa Chica isn’t over just yet.

A day after the groundbreaking ceremony, stockholders will meet in Irvine to consider a shareholder insurrection seeking to put the development – if not the entire company – up for sale. Shareholders Mellon HBV Alternative Strategies and Mercury Real Estate Advisors LLC, which together control about a fifth of the company, fear a housing slowdown will deplete the value of the ocean-view development before the homes can be built.

Management maintains that dissident shareholders lack the votes to force a sale to another homebuilder.

“After 30 years of fighting, they’ve finally got their plans to build, and now they’re fighting among themselves,” said nearby resident Mark Bixby, a member of the Bolsa Chica Land Trust. “I find that kind of amusing.”

A DEVELOPMENT DREAM

The coastal development, known as Brightwater, is a fraction of the size of the behemoth project developers envisioned 30 years ago. That dream was squeezed smaller by lawsuits, new legislation and grass-roots lobbying.

Back then, developers talked about building a marina connected to Huntington Harbour that would be lined with retail shops, restaurants and waterfront homes, said former Huntington Beach mayor Shirley Dettloff.

Dettloff, a young mom at the time, was just learning about the role of wetlands to the ecosystem – how they offer flood protection, a breeding ground for fish and birds and a home to wildlife. She and five others vowed to protect the area from development and formed the nonprofit group Amigos de Bolsa Chica. Amigos was the first of three grass-roots groups formed over the years that fought to scale back development proposals – the largest for 5,700 homes and a 1,200-slip marina covering 1,600 acres.

“We probably defeated 10 different bills in the Legislature that would have taken away control of the land from local government,” said Dettloff, also a former California Coastal Commission member. “We were kind of pioneers out there struggling to do something that we knew was right.”

Late last year, their battle with California Coastal ended when the state Wildlife Conservation Board bought 103 acres from the developer to be added to the 1,100-acre Bolsa Chica Ecological Reserve, paving the way to build Brightwater.

California Coastal and its homebuilding subsidiary, Hearthside Homes, also will fund a $2 million restoration project on about 37 acres of the 105-acre project site.

An interactive nature trail lined with signs that describe the historic uses of the mesa and its native habitat, such as raptors and hawks, will connect the neighborhood to a swath of eucalyptus and open land between the wetlands and the new homes. Southern tarplant, a native Southern California plant, will be restored around a protected seasonal pond inside the neighborhood.

In a separate project, the 600 acres in the Bolsa Chica lowlands also are being restored to their natural state.

At least 96 percent of the land originally owned by California Coastal has been preserved as open space.

“I think it’s a perfect resolution to the battle,” said Ed Mountford, Hearthside’s senior vice president. “The state of California gets to enjoy 96 percent of the land, and 356 lucky people are going to get to enjoy the other 4 percent at the end of the day.”

The scaled-down development is seen as a victory for environmentalists, even though they’ll still cringe when bulldozers break ground.

“Given where we started and where we are now, we still feel pretty good about what we’ve accomplished,” said Marc Stirdivant, executive director of the Bolsa Chica Land Trust.

PRE-EMPTING THE BUBBLE

But just when developers thought they were done fighting, stockholders are picking up the fight where the environmentalists left off.

Mellon HBV Alternative Strategies, a New York hedge fund and the second-largest stockholder, wants to sell the project now to capitalize on high home prices before a waning demand drives down their profits.

In Orange County and the nation as a whole, the housing market has been slowing. Sales and appreciation rates have decreased.

In addition, homebuilder stocks have been tumbling in the past few weeks on reports that new-home orders are declining. California Coastal’s stock has dropped almost 19 percent since the end of April – from $37 a share to just under $30 a share on Friday.

“If not promptly exploited, the present optimal opportunity to maximize stockholder value may be missed,” a letter from a Mellon executive stated earlier this month.

Fourth-biggest shareholder Mercury Real Estate Advisors LLC has urged management to sell the entire company for the same reason.

Mellon has been urging fellow shareholders to vote against a management slate of board nominees at the firm’s stockholder meeting Tuesday.

Pacini said the firm’s management and its supporters together hold about 33 percent of the stock. He forecast that 90 percent of the remaining stockholders would support management.

A VIEW OF THE WATER

No matter what happens in the boardroom, construction likely will move forward on the high-demand homes.

About 450 potential buyers have signed the company’s interest list since the state Coastal Commission approved the development in April 2005, a company official said. They will vie for 356 homes, up slightly since last April’s vote with the addition of seven lots straddling the Huntington Beach city limit.

Buyers will have 14 floor plans to choose from in four developments spanning 68 acres: The Trails, The Sands, The Cliffs and The Breakers.

They range from 1,700-square-foot homes on 3,000-square-foot lots at the back of the project to homes 4,000 square feet or bigger on lots with a minimum of 6,000 square feet along the bluff overlooking the wetlands, Pacific Coast Highway and the ocean. Sixty of the homes will have ocean views, company officials said.

The most modest development, the Trails, would start at $1 million in today’s market, said Doug Woodyard, Hearthside’s vice president of sales and marketing. But it’s too soon to tell what they will go for when the first homes go on sale in May 2007.

The floor plans provide a variety of “coastal-influenced” designs reminiscent of beach-cottage styles. With names like the Hamptons and St. Augustine Monterey, the homes will feature slate roofs and shingle siding.

“We wanted to do something different,” Mountford said. “We wanted to do something (to make) people say, ‘Wow! Where’s the stucco?’ ” And after decades of fighting, Mountford and his colleagues at Hearthside are happy to finally focus on building “spectacular homes.”

“I knew this day would come; I just didn’t know if I’d live long enough to see it,” he said.

For more than a decade, Jeff Collins has followed housing and real estate, covering market booms and busts and all aspects of the real estate industry. He has been tracking rents and home prices, and has explored solutions to critical problems such as Southern California’s housing shortage and affordability crisis. Before joining the Orange County Register in 1990, he covered a wide range of topics for daily newspapers in Kansas, El Paso and Dallas. A Southern California native, he studied at UC Santa Barbara and UC Irvine. He later earned a master’s degree from the USC School of Journalism.

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